System Integrity and Validation

System Integrity and ValidationIn the past months, Jarowito Company has analyzed carefully Kudler Fine Foods accounting information system. It has explored the key business and the accounting information needed. It has analyzed strength and weaknesses of the systems and technology, suggesting some technology opportunities. It has evaluated the possible threats, suggesting how to avoid them. It has recommended the use of industry-specific software. It has examined the automation of the company’s data table through its elements and it has explained how the use of pivot tables can improve management decision-making. It has scrutinized the internal controls and it has suggested the implementation to achieve corporate governance. It has also analyzed the process of the audit plan that Kudler should follow. Finally, Jarowito will recommend ways the audit documentation and process may improve the security and validation of their current system by using computer technology techniques called CAATS.

Computer assisted audit tools and techniques (CAATS) are software’s that increase the productivity of auditors during an audit, the software’s can extract data from the system that has to be analyzed. CAATS are also techniques that increase the efficiency and effectiveness of the function of the auditors (Bagranoff, 2008). CAATS can be use for the following purposes to validate the integrity of applications and validate the integrity of data. 1. Validate application integrity:

As per Bagranoff, the objective of application integrity is to determine if the source code has been compromised.” The application can be validated through test data, integrated test facilities, and parallel simulation.

Test Data: the auditor creates a dummy data file in the system, runs all the reports needed and compares them with the expected results. Test decks are examples to test application logic and processing. The method depends on the auditors’ anticipating and capturing all possible deviations and exceptions. The step is very hard because even the most experienced auditor may miss some information. The process does not allow a live data analysis.

Integrated test facilities (ITF): this type of analysis allows the auditor to test the data live. The auditor still creates a dummy file that merges with the original file and compares results with expected results. It will also analyze the process for any corruption.

Parallel Simulation: it reproduces a module or a whole application. Client’s transactions are put into the system created by the auditor and compared to the expected output. If any discrepancies appear, they are flagged for further investigations. 2. Validate data integrity:

The goal is to uncover any anomalies in the data either intentionally or unintentionally. Integrity of data refers to a quality which demonstrates that the data once stored will not be altered in an unauthorized way by a person, or by the malfunctioning of hardware (Wiki.answer, 2011). Therefore, testing should be performed on a regular basis because data changes over time.

The first step is for auditors to extract and analyze large amount of data and test it. They can either import the data into ACL or any other similar software. The ACL is a read-only program so it does not affect the underline exported data. The import can be achieved in different ways, it can be copy into a zip disk, CD-ROMS, and tape; it depends on the size of the data to be imported. The next step is to perform the data verification procedures which can be counting, totaling, verifying, classifying, and stratifying. The software retains all the result and through different commands the auditor can print the different logs to ensure...

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Kudler Finer Foods has a very strong accounting information system in place but there is room for improvement. Kudler’s has taken the steps in the correct direction by implementing an industry specific system. Computer technology only makes auditing Kudler Finer Foods easier and more accurate. Computer assisted auditing tools and techniques CAATs is highly recommend for Kudler finer Foods. The ability to share information with clients and auditor’s is one of the selling points. The main selling point of using CAATs is that every avenue of Kudler’s accounting information system will be reviewed and will ensure Kudler Finer Foods that their systemintegrity is intacted as well as the validation of the system. In the brief to follow will explain why using computer technology and CAATs makes the best business sense.
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In addition to the audit plan for the analyzed processes, of Kudler Fine Foods, encouragement of ways to improve audit documentation and process, by using computer technology was addressed to Kudler’s management team. As a result, Kudler Fine Foods management team is considering incorporating proposed computer assisted auditing techniques (CAATs) within its systems. CAATs will increase efficiency levels of an auditor’s personal productivity during analysis and data extraction of the audit which is beneficial to the performance of Kudler. CAAT will also service as a validation agent providing assurance of data integrity and reliability to the operations of Kudler Fine Foods for its users. CAAT surfaces inconsistencies that can be verified timely.
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The implementation of industry specific accounting software at Kudler Fine Foods was recommended that would track inventory needs more efficiently as the company was experiencing excessive spoilage of perishable inventory which was the streamline to profitability. The new system managed inventory by automation, POS, and accounts payable/receivable functionalities thus saving money and assisted with better forecasting methods of inventory maintenance. IT audit were evaluated to assist the system’s internal and external control designs based on the infrastructure of Kudler’s needs as well as adhering to compliance of standards and procedures....

...application integrity. The purpose of this technique is to find whether the source code has been compromised. Verifying the overall integrity of the applications is the second CAATs technique. This technique’s objective is to ensure that the data was imported correctly and also to find any irregularities within the data.
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Recommendations were made to Kudler to implement CAATs into the auditing process. This implementation will be beneficial to the company as far as validating and verifying information. The use of audit productivity software would allow an organization to streamline and automate processes. Organizations can take it a step further and use audit productivity software to assist with the design of computer software. The following brief will discuss CAATs and audit productivity software.
Computer Assisted Auditing Techniques
Computer Assisted Auditing Techniques (CAATs) can be used to both validate application integrity and to verify data integrity. Data validation determines whether the source code has been compromised. The applications can be validated through test data, parallel...

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How CAATs is used to validate data and systemintegrity:
Computer- assisted auditing techniques are used to increase the effectiveness and efficiency of audit functions. There are many reasons CAATs are preferred such as auditors may use the software to extract data which is used to analyze potential fraud data. CAATs may also be used to test and validate computer programs to determine if the organization’s source codes are at risk. The techniques may also be used to analyze samples of data or all of the data. CAATs can be used to increase the effectiveness of internal and external audits while allowing the auditors to analyze the financial data which provides a feature that would not be possible if the audits had been done manually. Computer- assisted auditing techniques are used to...

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